Trading week of July 25 – July 29 2022

General market sentiment: bear

There’ll be a fed meeting this week on either the 26th or 27th. Most likely a full one basis point rate hike.

The 10 Year Treasury went down from 2.904% to 2.811%. Does this mean that percentages are going down? Would that be good for the market?

Inflation is at 9.06%, according to this chart.

According to the Forbes calculator, mortgage rates seem to be 3.75% – 6%. Which is about the same as last week.

According to this chart, unemployment is at 3.6%.

The price of crude oil is below $100, at $96.37. Which should be a good sign. Although it keeps oscillating around that range, with $96.37 being the low range. So I’m not sure what price it needs to be at for gas prices to go lower. At the beginning of the year it was at around $87.

SPY started on the red, having a high of 400 on Friday July 22. Right now on Monday is at around $394. What caused it to go down over the weekend? Were there any catalyst news over the weekend? These are the catalyst events that I believe caused SPY to go down over the weekend.

Big events this week:

Lots of earnings reports from big companies and there’s the Fed meeting. Plus, there’s the GDP coming out on July 28. And from what I’ve been reading in the news, it seems like there’s a negative sentiment of it. Not exactly sure why yet.

It seems it’ll be a negative GDP report, there was a negative GDP report for the first quarter, so if there’s another negative one, I believe that’s a strong signal for a recession.

Here’s a good video with this week’s breakdown of the news.

WATCH LIVE: Federal Reserve Chair Jerome Powell gives update after Fed interest rate hike

The Fed increased rates by 75 basis points.

Big earnings this week:

• MSFT – July 26
• AMZN – July 28
• AAPL – July 28
• GOOGL – July 25
• META – July 27

Top gainers industry:

I’ll be checking over the week on these as I’m unsure if they change daily or weekly.

• Biotechnology
• Shell Companies
• Semiconductors
• Internet Retail
• Internet Content & Information
• Engineering & Construction

Catalyst events

This week we have the 1.) earnings reports from big companies as mentioned above and it seems there’s a negative sentiment associated with them. 2.) Along with the Fed meeting, that will most likely have a 75-100 basis point rate hike. 3.) The GDP report coming out might be negative, signaling a recession.

It’ll be a busy week in the market with a general negative sentiment overall.

About the upcoming GDP report

Here’s a great article discussing the upcoming GDP report and how that’ll affect the market.

The biggest being that a recession is not necessarily determined by two negative consecutive quarters, but rather by the Business Cycle Dating Committee of the National Bureau of Economic Research.

And saying that the first quarter wasn’t necessarily negative, so even if this one is negative, it won’t mean a recession since the first one wasn’t negative.

Observations

WMT stock went down from $132 on Monday (07/15) to $121 on Tuesday. Is it because of this news: Walmart shares slump after retailer cuts profit outlook on inflation concerns?

There were some empathy plays along with WMT going down. However, it seems like the stock is still bullish, seeing how it only went down because they decreased the expected earnings because of high inflation.

WMT says it’ll keep prices low so this is a good sign for the company because people will still buy from their stores.

TGT also decreased their expected profits but more because they have extra merchandise.

GDP

There was a second negative GDP report but the market barely reacted to it. Most likely because the market was expecting this.

IMF slashes global GDP forecast as economic outlook grows ‘gloomy and more uncertain’

Rising food and energy prices are driving inflation up. The overall effect of inflation is yet to go away as it might come full force later in the year.

The coming recession might be more of a shallow recession as inflation doesn’t seem to be going away.

Inflation is a global problem with the US and UK hitting record highs in 40 years.

The general GDP growth will be much slower than expected with inflation not going away.

According to the The Dow Slipped, Walmart Tanked — and What Else Happened in the Stock Market Today, GOOGL earnings report might be a catalyst for the market with it being such a big company. Along with the earnings from MSFT.

MSFT earnings indicate a spending in tech and earning for GOOGL indicate spending in advertising.

Interactive Brokers question

Why does the margin impact change so drastically when changing the limit by one:

This is for a naked call for SHOP at strike price $35 one day before earnings this week.

With there such bad news for this stock, would this have been a good move before earnings?

Real Estate

As mortgage rates keep increasing, there are less home sales happening. According to this CNBC article, they have fallen 20% from a year earlier.

Mortgage rates started at 3% this year, and are now over 6% (ish).

The NAR expects sales to be down 13% for this year, but it depends on mortgage rates.

Earnings reports

According to the video in Microsoft misses estimates but stock up 5% on rosy guidance GOOGL has a slow growth rate.

It seems the jump from Microsoft happened because the CEO told about really good deals the company is signing that will increase future revenue. So even tho it missed expected earnings, the stock went up.

Even with a good rise (5%) for MSFT, the stock has fallen a whole 25% this year.

Alphabet missed expected earnings as well. However, after checking the chart, it jumped today.

Alphabet rose because investors were expecting more troubles or worst results than the ones reported.

According to the video in Alphabet, misses on earnings and revenue for second quarter ad spend and the growth rate has decreased and will continue to decrease because of inflation. But the digital growth rate is still healthy.

AAPL came out with good earnings reports and made the stock jump up.

Moves

MSFT 272.5/282.5. This one was to test the volume, stocks with lots of volume have the orders go through much faster. I’m 70/30 about this move. It has a delta of 85% probability of profit.

General questions

• what are the three questions I have to know about the market?
• Are signs of a recession bad? Or not bad since it’s already what the market is expecting?
• Why is the US Treasury percentage going down if the Fed is doing rate hikes? Aren’t they supposed to be going back up?

Learnings from this week

• Earnings reports make a stock really volatile
• if a stock went up, it can still keep going up
• Even with rate hikes and inflation, the stock market seems to be on a bullish trend because it is what the market was expecting, plus the rate hikes are supposed to bring inflation down so it’ll be good for the market.
• if everything goes as expected, the market will be good